The holiday season is a time for giving to family and friends. It is also apparently a time to give to those in need. Nonprofits rely on end-of-year donations to meet their budgets. While most Americans will not admit it, the IRS January 1st deadline encourages charitable gifts at the end of the year.
24/7 Wall St. identified the 10 states where Americans give the most and least to charity, based on IRS data for charitable giving.
24/7 Wall St. reviewed IRS data compiled by the Urban Institute, which reports on the most recent annual data available from the IRS every year. According to Katie Roeger, assistant program director at Urban Institute, “Only a handful of states saw increases in average donations in 2009. The increases came from both high-income states such as New York and Connecticut as well has lower-income states like Kansas or South Dakota.”
The most generous states, for the most part, are also the wealthiest ones. Five of the 10 states that give the most to charity on a per taxpayer basis are among the top 10 states with the highest average income per taxpayer. There are also a number of relatively poor states that are generous, despite their low income. Alabama and Georgia have relatively low average incomes, but the average taxpayer gives more than taxpayers in other, wealthier states.
A similar trend can be seen among the least generous states. Eight of the 10 states have incomes lower than the national average, and five of them are among the 15 states with the lowest income per taxpayer. At the same time, a few states appear to be less generous, despite their wealth. New Hampshire and Alaska taxpayers make more than the national average, and have more households that make over $200,000 than most other states, but taxpayers give less on average than other, poorer, states.
24/7 Wall St. relied on Urban Institute’s methodology to determine the most charitable states. Using data collected by the IRS, the institute ranks each state by average charitable donation per taxpayer, highest to lowest. The number is calculated by dividing the total number of taxpayers in each state by the total charitable donations listed in itemized deductions for taxpayers.
The IRS only keeps track of charitable donations filed by taxpayers as part of their itemized deductions. While charitable gifts that are not included in tax filings are not tracked by the IRS, they only account for approximately 15% to 20% of total annual charitable giving in the U.S each year, according to The Giving Institute. According to the Giving Institute’s Executive Director Geoffery Brown, because nonitemized deductions are not calculated at a state level, the Urban Institute’s methodology is a good proxy for the average charitable donations given per resident in a state.
Profiles of Individual Charitable Contributions by State, the Urban Institute’s most recent report published this year, is based on IRS filings for 2009, filed in 2010. To reflect the extent to which wealth impacts charity, 24/7 Wall St. also included average adjusted gross income per taxpayer, as well as the percent of taxpayers reporting charitable donation, both from the Urban Institute. The percentage of households that earn more than $200,000 per year per state and poverty rates are from the Census Bureau. We relied on Convio’s list of the most generous cities in the U.S. for 2010, based on online donations per person, to demonstrate charitable giving on a local level.